THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

REP. PHIL GINGREY, R-GA.: In just the last few days, my office has received dozens of complaints regarding increases in their monthly premiums. I received one such notice from a mother in her early 50s who just received a notice that not only will her insurance premiums double, but she will also have to switch insurance -- insurers to keep her doctors due to the effect of the Affordable Care Act.

Can you imagine receiving notices like this? I can tell you that, just in my district, the 11th of Georgia, many more are experiencing this situation. Madam Secretary, this is akin to telling seniors that in a few weeks they're Medicare coverage will be dropped, or their premiums would double.

Now, I know that neither you nor the administration would ever advocate for such a policy. Yet, here you are subjecting those currently in the individual market to such government intervention. And I would hope that you would agree with me in recognizing that these increases are a heavy hardship on my constituents -- on all of our constituents, Republican or Democrat.

Now I'll get to my questions. You know the health care law included a hardship exemption from the individual mandate. Yet, the administration has failed to finalize the application form for the hardship exemption three and one-half years after we passed this law. As of today, can an individual apply for a hardship exemption from the individual mandate on healthcare.gov, yes or no?

On October 15th, Politico reported that if the online system for getting into Obamacare coverage is rickety, the system for getting out of the mandate doesn't even exist yet. HHS says, it will take another month at least for the administration to finalize the forms for the hardship exemption from the individual mandate.

Why has it taken three and one-half years to finalize a simple application form for an exemption from the individual mandate?

SEBELIUS: Well, sir, as you know, the individual mandate is not in place until next year. We have made it very clear that if somebody is Medicaid eligible in a state that doesn't choose...

(CROSSTALK)

GINGREY: My last question and my last second.

An estimated 16 million people in the individual market have or will receive cancellation notices stating their health insurance coverage does not meet minimum coverage requirements of the Affordable Care Act.

The bill specifically grants you, Madam Secretary, the power to determine the criteria for a hardship exemption. Will you provide all of these individuals a hardship exemption since the Affordable Care Act is taking away their plan? Will do you that?

SEBELIUS: No, sir. And I think those numbers are far from accurate: 95 percent of Americans who have health insurance will be in a continuous plan -- Medicare, Medicaid, employer-based, V.A. -- 95 percent.

Five percent who are in the individual market, a portion of those 5 percent -- a portion of them, about 12 million people -- a fraction of those 12 million will have a plan that doesn't meet the criteria and has not been grandfathered in.

They are indeed receiving notices. Many of those individuals -- half of them -- will be eligible for financial help getting a new plan and they have many more choices in the marketplace. So we will not have a blanket exemption.

GINGREY: Sounds like a hardship to me, Madam Secretary.

REP. FRED UPTON, R-MICH. CHAIRMAN: The gentleman's time expired.

Ms. Christensen.

DEL. DONNA M.C. CHRISTENSEN, D-VIRGIN IS.: Thank you, Mr. Chairman.

And thank you Madam Secretary for being here and thank you for all that you and your staff at HHS has done in implementing the Affordable Care Act to insure that it would provide the many benefits to children, to women, to Medicare beneficiaries and to ensure security to those who already have insurance as well as lower costs. Of course, the biggest complaint has been about the application and the enrollment website, but we have heard over and over from you that those are being addressed.

But you would recall and I know my colleagues would recall that Congressman Rush and I have always been concerned about those who do not have Internet access, those who are uncomfortable using the Internet and would not use it.

So I just wanted to just remind everyone that there are other avenues for enrolling either by telephone or by paper, either alone or with the help of a certified, you know, application assistant.

But my question goes to one of the rumors that has been circulating. There many rumors about how the Affordable Care Act has affected part-time workers. And some of my colleagues on the other side claim that the companies are moving workers to part-time jobs, because of the health care reform law and that low wage workers are being detrimentally affected.

And I understand why these claims are being made as just another part of the on going effort to undermine the law. Would you take a few minutes and just set the record straight on the part-time issue?

SEBELIUS: Certainly.

Ninety-five percent of businesses in this country are small businesses; under 50 full-time employees. And there is no responsibility that any of those employers have to provide health coverage for their employees.

On the other hand, there are now tax credits available for some of the smaller employers who want to offer coverage to actually come into the marketplace.

For the other businesses, the businesses hiring 50 or more, there is a standard that says an employee is considered full-time if he or she works 30 hours a week. And that really came from a market snapshot with help from the small business administration of where employee benefits were in the private market based on hours of work.

What was a part-time or a full-time employee?

What we know about the economic data is the high point of part- time workers was in 2008 and 2009 at the height of the last recession. It has been decreasing each and every year. There is no data to support the fact that there is an up tick based on the impending Affordable Care Act. I'm sure that there may be some individual employers making some business decisions about how many workers they want full-time and how many part-time. But I can tell you there is no economic data or employment data that supports the notion that this is an effect of the law.

CHRISTENSEN: True, and in fact, it's my understanding, that part-time workers are at the lowest percentage of workers in many, many years right now. SEBELIUS: Well, and for the first time, as you know Congresswoman, part-time workers will have options for affordable health care. They never had that before. They've never had options in the marketplace. They never had some health purchasing coverage for themselves and their families.

Their full-time colleagues have, but they have not. So they will have options.

CHRISTENSEN: And just to be clear, I had another really long question, but the last part of it -- it would be fair to say that the every point along the way you expected this website to work based on everything that you have been told by the contractors up until that point.

SEBELIUS: I expected it to work and I desperately want to get it working. I....

CHRISTENSEN: More than anyone else, I am sure.

SEBELIUS: ... can't tell you how frustrated I am, and we are committed to fixing it. The only thing that I think builds back the confidence of the public is fixing it.

Last week when the contractors built the system were here, I asked them all under oath if they had actually delivered the system they were contracted to build. And all four of them answered yes. I want to ask you, did the contractors deliver the system that you contracted them to build?

SEBELIUS: I don't think I can accurately answer that question. What we know is we've a system that doesn't function properly...

SCALISE: We definitely know that.

SEBELIUS: As we fix things, we'll know more about what is broken along the way. And I'll be able to...

SCALISE: So would someone in your office know -- somebody in your office oversaw this implementation and received the product. And they either said, this is the product we contracted and paid hundreds of millions of dollars to build or it wasn't.

Does somebody have the ability to get that information?

SEBELIUS: Well, I think that we can say that products tested individually, verified individually. SCALISE: But clearly was an integrated system.

(CROSSTALK)

SEBELIUS: (OFF-MIKE) don't work well together.

SCALISE: Well, but, you know, I used to write programs for a living. I developed software products for a living.

If you're developing an integrated system, it's irrelevant if one isolated component works by itself. But when you plug it in together it doesn't work, that's a system that doesn't work.

One of the question I had and others had, somebody in your agency made a decision weeks -- literally weeks before the deployment -- to change the system. Instead of going from a browser ability where somebody just like on Kayak or just like on Amazon.com could go shop for products, look at prices before they purchase, which is how consumers are used to doing this. Y'all made the decision to change it around and gather all their information first before you could let them see prices.

Was that you who made that decision?

SEBELIUS: No, sir.

SCALISE: Was that Ms. Tavenner?

SEBELIUS: It was Ms. Tavenner and a team who looked at not imposing additional...

SCALISE: Did that team make the decision because once they knew once people actually saw the prices, and we're getting reports from all of our constituents of dramatically higher prices than what they were expecting.

Did you make the decision because you knew that when they saw the prices they might not want to buy the product so you wanted to gather their information first?

SEBELIUS: Sir, first I did not make the decision. I was informed about the decision.

We didn't...

SCALISE: Do you agree with the decision?

SEBELIUS: ... rolling off a number of features. And clearly they can see the products. No, there is no requirement to buy anything.

SCALISE: Look, I spent two hours trying to get into the system. I never once got to a point where I could see a price. I did get kicked out many times and got some of those blank screens other people got.

I do want to share stories with you from some of my constituents because I -- we started a page on our -- on Facebook and on Twitter. We are collecting what's called Share with Scalise. People are sending us stories. And we're getting lots of stories from my constituents.

I want to read you a few of them.

Randall (ph) from Mandeville (ph) said "My health care premium went up 30 percent to over $350 a month increase."

We had Michelle (ph) from Slidell (ph), "Our insurance premiums are going up $400 a month and our deductible has increased." And then you have got Shawn (ph) from Covington (ph), who said, "My current plan through United Health Care is no longer being offered in 2014 due to Obamacare. In fact, I received a letter stating that the new health care law was indeed the reason for the removal of my current health care plan."

Madam Secretary, what you would tell Shawn (ph), who liked his plan and now has lost it? And he was promised by you and the president he'd be able to keep that plan.

What would you tell Shawn (ph) now that he has lost his plan?

SEBELIUS: I would tell Shawn (ph) to shop in the marketplace and out of the marketplace.

SCALISE: Do you really think that's acceptable answer to Shawn?

SEBELIUS: If Shawn (ph) -- again if United chose not to keep Shawn's (ph) plan in effect for Shawn (ph)...

SCALISE: Because of the law. This is the (inaudible).

SEBELIUS: Sir, the law said if you keep Shawn's (ph) plan in place, if he liked his plan, if you only...

SCALISE: But Shawn (ph) liked his plan...

SEBELIUS: ... to Shawn (ph), then the plan is still there.

SCALISE: You and I may disagree over who you work for. I work for Shawn (ph). You work for Shawn (ph), Madam Secretary. Shawn (ph) lost his plan that he liked. And there are thousands and millions of Shawns (ph) throughout this country that lost the plan they liked because some bureaucrat in Washington said we think your plan is not good enough even though you like it, even though you were promised can you keep it, you're now not able to keep that plan.

I think you deserve to give Shawn (ph) a better answer than you just have to go shop for something else even though you lost your plan.

UPTON: The gentleman's time -- the gentleman's time has expired.

Mr. McNerney?

REP. JERRY MCNERNEY, D-CALIF.: Thank you, Mr. Chairman.

Thank you, Madam Secretary for coming today.

I'm going to follow up on Mr. Doyle's line of questioning. One concern I have with the fallout from the website is that many users who tried to sign up and were discouraged because of problems will now be too discouraged to come back once the site is fixed.

So what do you plan to do to get those folks to come back? SEBELIUS: Well, sir, we intend to invite them back formally by e-mail, by message. But we don't want to do that until we're confident that they will have a different experience.

So fixing the site is step one. And then inviting people back to the site to make it clear that when our timetable is fulfilled, they have four months to shop for affordable health coverage on a fully functioning site.

We know we're going to have to spend special time on young and healthy Americans who don't start out thinking they need insurance, aren't aware of the law, certainly don't want to use a failed or flawed site. So we're have to spend some particular attention on them.

MCNERNEY: Thank you.

Have the software specifications for the website and its related software elements, including the test specifications, has that changed since the initial rollout?

SEBELIUS: I know that there certainly are some changes because, since October 1st -- I'm sorry.

MCNERNEY: Yes, since the rollout, the specifications.

SEBELIUS: Well, we -- the specifications haven't changed. We are certainly fixing, as I say, speed and reliance is one of the issues we're taking a look at. That's the performance side.

But there also are some functionality sides that things do not work as they can, including the enrollment passed on to insurers. So we are fixing functionality. And I don't think that's a change in the specs. I think it is actually making the system work the way it should.

MCNERNEY: Well, are you -- or is the department doing a prioritization on the problems?

SEBELIUS: Yes.

MCNERNEY: Could you describe that a little bit?

SEBELIUS: Yes, as of last week when Jeff Zients joined us for this short-term project, we asked him to lead a sort of management team. We have pulled in all of our contractors as well as additional talent that they may have available.

We have talked to tech folks in and out of the private sector and insurance, some of their tech experts to get all eyes and ears, made a full assessment, developed a plan for fixes along the way, have a punch list for going after those fixes.

And we are doing a daily tech briefing and blog to tell people what we have found, what we have fixed, what's coming next, what the functionality is and we intend to do that until it's fully functional. MCNERNEY: Well, thank you.

Madam Secretary, looking past the initial problems with the ACA rollout, do you think that the Affordable Care Act will be successful in bending the health care cost curve and reducing the fraction of our national economy that goes for health care?

SEBELIUS: Well, I think that we have already had some success. I think the goal is to continue to achieve that, a fully insured population arguably with preventative care, with an opportunity to see a primary care doctor and not go through the emergency room will in and of itself reduce costs.

Having people identified earlier who may have serious problems and managing those problems will reduce health costs. But I think the delivery system also needs some considerable help in paying for not a number of procedures, number of tests, number of prescriptions but paying for health outcomes.

MCNERNEY: Thank you, Mr. Chairman.

UPTON: Mr. Latta?

REP. BOB LATTA, R-OHIO: Well, thank you very much, Mr. Chairman.

And Madam Secretary, thanks very much for being with us today. Appreciate your testimony so far today.

What I'd like to do is I'll get these to you because there are so many we've received. These are questions that we've received from our constituents back home, specifically about what's going on with the website and for them.

And so what I'll do, I'd like to get those to you. But there is a lot of questions here and a lot of thoughts gone into a lot of these questions.

But if I could start with last week's testimony when our -- four of the contractors were here. And in one of the questions that I had posed to Ms. Campbell from CGI, in her testimony she had stated that they delivered the medicare.gov and also the federalreporting.gov.

And I'd asked at that time, were these sites more or less complicated than the site that we were talking about here today?

And she said, of course, the site today was more complicated.

And in the questioning and from her testimony -- and we've been hearing about this end-to-end testing that wasn't happening, that we had individuals out there saying that about two weeks had been done, but I had asked her about was there sufficient enough time when they did medicare.gov?

And the response that she gave me back was on medicare.gov, which was a less complicated site -- and she stated that we had sufficient time to test the system before it went live. And I asked her in a follow-up then, what was that sufficient time?

And she said we had a number of months before the system went live at that time.

And then -- and I just want to make sure, because again, you know, sometimes things don't get reported accurately. But in the "U.S. News and World Report" on October the 18th of this year -- and there is some questions going back and forth. And I just want to make sure that, you know, that you were quoted properly.

Said, "'After two weeks of review', the HHS secretary concluded, 'we didn't have enough testing specifically for high volumes for a very complicated project. The online insurance marketplace needed five years of construction and a year of testing,' she said. 'We had two years and almost no testing.'"

Is that correct?

SEBELIUS: I don't know the quote. I'd never suggested that we needed five years. I don't know where that is from.

(CROSSTALK)

LATTA: Well, that's one of the things we're going to check.

SEBELIUS: We clearly did not ever have five years. The law was signed in (inaudible) 2010.

LATTA: Well, let me -- and then last week you were -- when you were down in Texas you were being asked by a reporter about the system and the launch. And one of the parts of the question was that, at what point did you realize the system wasn't going to be working the way that you envisioned before the launch and why didn't we stop it before the launch?

LATTA: And, again, this is what was reported.

"We knew that if we had another six months we would probably test further. But I don't think anyone fully realized both the volume caused such problems but volumes also exposed some of the problems we had."

Now going back, though, to Ms. Campbell's statement that they tested more extensively on a system that was not as complicated, but HHS, CMS decided to go forward with only a very short period of testing. Do you think that was acceptable?

SEBELIUS: Well clearly looking back, it would have been ideal to do it differently. We had a product that frankly people have been waiting for decades to have access to affordable health care.

Medicare existed well before the website. Medicare is a program that started 50 year ago. The website was an additional feature for consumer ease and comfort. And so they were not launching Medicare. They were not delivering health benefits to seniors. They were putting together an additional way to enroll in Medicare.

I would suggest, sir, that we had deadlines in the law that people had benefits starting January 1. We wanted a extensive open enrollment period so that a lot of people who were not familiar with insurance, didn't know how to choose a doctor or choose a plan, had never been in this marketplace, or people who needed to understand fully what the law offered had ample time to do that.

So the date that I was, again, required to select for open enrollment, that's again part of the statute. How long would open enrollment be? We picked that data. All the contractors that began early in this process in the fall of 2010 when we issued -- I'm sorry, 2011 when we issued the initial contracts to CGI and QSSI knew the October 1 date. That was not changed. It wasn't added to.

As we got closer to the system, one of the reasons, again, that we pared down what needed to launch on October 1 was an attempt to minimize the risk to the system, to get people to their ability to see clearly what they were entitled to, what the plans were, and if those chose to, to enroll. Clearly the testing should have been longer, should have been more sufficient.

UPTON: Gentleman's time is expired.

LATTA: Thank you very much, Mr. Chairman.

UPTON: Mr. Braley?

REP. BRUCE BRALEY, D-IOWA: Thank you, Mr. Chairman. Madam Secretary people who are watching this hearing might be under the assumption that there's some kind of political debate going on over the Affordable Care Act, but I think people in Iowa don't care anything about who's winning the political debate. They want these problems fixed and they want them fixed now. And I think that's the responsibility of everyone in this room to make sure that that happens.

I tried to go into the marketplace on October 7 and I encountered problems immediately dealing with the security code questions which required you to select dates. One of them was type a significant date in your life. Today is my birthday, so I put that in. I tried three different ways of entering that date and got a message each time, important, this is not a valid answer. Same thing for the third date entry.

And a lot of times when you registering online for anything and you have to put a date in, there will be a little prop there that tells you what the format is you're required to enter. Do you know, have we solved this problem in the security code area?

SEBELIUS: Yes, sir. One of the initial issues was just getting people into the site and the ID proofing, which is a two-step process. One is that you give some preliminary information and you set up a password.

But the second to ensure that your personal data can't be hacked, can't be interfered with is the second step where some personalized questions which only can be verified by you are indeed part of that. Again, that was a -- an initial hold up in the system. We focused a lot of attention on that in the first several days.

It was fixed, only to then discover that there were system problems throughout the application. And that piece has been fixed, but I would suggest it also was a function of trying to make sure we had the highest security standards, that we were not cavalier about someone's personal information being able to be addressed and attached. And it -- it was a functionality that didn't perform properly but does now.

BRALEY: One of the things that keeps coming up in this hearing because you are from Kansas is references to "The Wizard of Oz." And people went to see the wizard because of the wonderful things that he did.

The Affordable Care Act is doing a lot of great things in Iowa. The Des Moines Register wrote that Iowans buying health insurance on the government's new online marketplace will face some of the lowest premiums in the country. It's increasing competition in our state. Iowa consumers are able to choose from 40 health plans in the marketplace.

You've mentioned the growth of health care spending is at the slowest rate in 50 years. Fifty thousand Iowa seniors have received prescription drug rebates. Bans on preexisting conditions are allowing people to get coverage and switch carriers, and now insurance premium increases are subject to review and can be rejected by the -- the people reviewing those plans.

But all of these good things don't mean anything unless we solve these problems. And what I need to know is how confident are you that the problems will be fixed by December 1?

SEBELIUS: Well again, Congressman, I have committed to that date because that is the assessment of both inside and outside experts have analyzed. And I think they kicked all the tires and looked at all the systems. I know that there's no confidence in that date until we deliver on the date. I'm well aware of that, and that's on me.

BRALEY: Since Americans were supposed to have six months to sign up, would you support ensuring they still have six months by extending the open enrollment period for two more months?

SEBELIUS: At this point, Congressman, they will have fully four months of fully functional all ways to sign up. And again, there are ultimate ways and the website right now that people are getting through.

The open enrollment period is extraordinarily long. It's about six times as long as a typical generous open enrollment period. And it's important for the insurance partners to know who is in their pool so again they can stay in the market next year and know who they're insuring.

So we think that the timetable will allow people four months' time to fully use the website. They can use it right now. They can use the call center. They can go to navigators. They can enroll.

UPTON: Gentleman's time has expired.

Mr. Harper?

REP. GREGG HARPER, R-MISS.: Thank you, Mr. Chairman.

Thank you, Madam Secretary, for being here today. I'm sure there are other things you'd rather be doing, but we welcome the opportunity to have this conversation.

I'm going to ask a clerk to bring you a document for you to look at so I can ask you a couple of questions. If you can go to page eight on that, I have highlighted an item there. But this is a copy of a CGI slideshow from October 11 discussing technical issues that must be addressed within the website.

And on page eight of what I've handed you, CGI recommended that CGI and CMS have a review board to agree on which issues can technically be solved and which should politically be solved. Was such a review board convened?

SEBELIUS: Sir, I cannot tell you. I've never seen this document and I'm not aware of this recommendation. HARPER: But CGI is responsible for the website, correct?

SEBELIUS: CGI is responsible for the application.

HARPER: For the application. Does it surprise you that in the slideshow that they gave October 11 they acknowledged political reasons for (inaudible)?

SEBELIUS: Sir, again, I've never seen this document. I have no idea what that means. Did you ask CGI when they came last week?

HARPER: Can you find out for us if such a review board was done and if any decisions were made on political reasons or any other reasons and find that out for us?

SEBELIUS: Sir, that question needs to go to CGI, but I can -- I can ask them to report to you.

HARPER: Well, if you would do that..

SEBELIUS: This is their document, if I understand it. This is not our document.

HARPER: Yes. Would you turn to page nine of that document please? And it states challenges on page nine in this presentation by CGI. And it says under challenges, unable to determine at this time whether low enrollment counts are attributable to system issues or due to users choosing not to select or enroll in a plan.

So those are two completely different issues obviously. If it is a system issue, that's something you have confidence at some point will be resolved. Correct?

SEBELIUS: Yes, sir.

HARPER: And if it's a user selection issue, that's an entirely different story, is it not?

SEBELIUS: Yes, sir.

HARPER: OK. Now when you used the phrase earlier about a punch list, that's -- that's like having somebody move into a house. Someone's buying a new house and they go through and they've been told this house is going to be ready for you to move in on October 1. They load up the van, they come in, and they get in and it's not finished. Part of the plumbing's not right. The wiring's wrong and -- and they go in.

This creates the situation where, you know, we -- health care shouldn't be a zero-sum game. I mean, we want to be fair to everyone. We want to -- we want to help people who are vulnerable. But at the same time, we shouldn't have to hurt folks.

HARPER: We've got people in my district, in my state who are getting notices of cancellation. They're being told of higher premiums that they're having. And these are great concerns that we have. And how do we work through that?

And I want to say I appreciate you accepting responsibility for these initial rollout failures that we've had. But who is ultimately responsible? It is the president, correct?

SEBELIUS: For the website?

HARPER: The president is ultimately responsible for the rollout, ultimately.

SEBELIUS: No, sir. We are responsible for the rollout.

HARPER: But who do you answer to?

SEBELIUS: I answer to the president.

HARPER: All right. So is the president not ultimately responsible like a company CEO would be?